Spotify is serving a playlist of media manipulation and Wall Street securities fraud, according to some ugly accusations.

Staunch artist activist David Lowery is fighting Spotify, Goldman Sachs, HFA, and the NMPA to the bitter end, with a $200 million lawsuit wavering in the wind. After Digital Music News effectively declared his contentious class action deflated, Lowery fought back by accusing Spotify and its mega-investor, Goldman Sachs, of hoodwinking DMN into a favorable headline that plays well for Wall Street manipulation.

The big blowback follows a big victory for Spotify, with 96% of publishers represented by the National Music Publishers’ Association (NMPA) agreeing to an out-of-court arrangement. In a discussion Tuesday, NMPA president David Israelite shared the opt-in results with Digital Music News, and earlier confirmed details of the Spotify arrangement to compensate unpaid parties.

But that misses the entire point of the class action, according to Lowery. “Beg to differ,” Lowery blasted in DMN’s comment section. “This doesn’t do anything to the class action. The class action is about UNLICENSED SONGS not UNMATCHED ROYALTIES.”

In other words, the NMPA-structured agreement is a sideshow designed to dupe songwriters and unsophisticated publishers. “Songs represented by NMPA publishers were never really the issue here. Why? In most cases the licensing was done via modified compulsory by NMPA owned Harry Fox Agency. The unlicensed songs are most likely to belong to non-NMPA publishers and songwriters.”

“However if you are Spotify or Goldman Sachs and you need to convince investors that the problem is cleared up this headline works! Let the securities fraud begin!”

In follow-up email correspondence, Lowery confirmed those comments to DMN, though questions of whether Lowery can achieve a critical mass of litigants remain paramount. Lowery noted that 100 participating class action members were needed to move the case forward, and raised the strong possibility that this class can be achieved. “The court determines if there likely are more than 100 affected songwriters,” Lowery relayed. “Then it’s a class. All similarly situated songwriters are automatically in. You can opt out if you like, but unless you do you are in.”

96% = 10%….

On the topic of whether ‘96% of publishers’ is actually accurate, Lowery offered a concrete breakdown of who might be left out of that equation. “[Israelite is] saying market share equal to 96%,” Lowery offered. “In a superstar economy like the music business, 96% by market share may represent only the most popular 10% (?) of songs/songwriters.”

And, maybe the NMPA and their members don’t actually have the authority to commit their songwriters into their structured agreement. “Just because publishers opted in NMPA deal, they may not have right to opt in for their songwriters,” Lowery offered. “Especially in administration deals. The Survey Monkey form that TuneCore used is evidence that they had no legal right to opt in their songwriters.”

The Wixen Problem.

Then, there’s this: a major defection from a serious publisher: Wixen Music Publishing, Inc. This letter, leaked to Digital Music News earlier this week, squarely indicates the Wixen is not participating in the NMPA-structured agreement.

Whether Wixen constitutes a fringe minority of publishers that opted-out is an important question. The company counts more than 2,000 individual songwriters and publishers, hardly a number to sneeze at. “We would match our client list against any slate in the music business,” the Calabassas, CA-based company boasts on its website. “And our clients stay with us forever.”

But the presence of at least one uncooperative publisher, especially one of this size, indicates that there are more out there. Indeed, Lowery is making the calculation that a verifiable class won’t be hard to achieve. “Simply put: what are the odds that at least 100 songwriters did not opt into the NMPA deal? Infringement damages are calculated per track not per spin,” Lowery continued.

“Even at the lower end of statutory damages for willful infringement (at $10,000 a song), my catalogue racks up 1.5 million in damages. At a maximum of $150k? My catalogue racks up $22.5 million.”

“The big blowback follows a big victory for Spotify, with 96% of publishers represented by the National Music Publishers’ Association (NMPA) agreeing to an out-of-court arrangement.”

No. My understanding is that publishers representing 96% of the compositions within the NMPA’s catalog have agreed to the out of court “arrangement”. That could easily represent the MINORITY of the publishers who are members of the NMPA. There are thousands of independent songwriters/publishers that represent less than 1% of the compositions in the NMPA’s catalog.

You do clarify this later in the article.. but why not present the facts accurately right out of the gate??

much more balanced, realistic un biased article – I was beginning to think that spotify had paid you guys for the last one “spotify crushes class action” that kinda rhetoric does no-one any favours until they actually do crush it.

I would say that 96% can = 10% because of the term ‘market share’ and the fact that the NMPA do NOT represent every single publisher. If you can’t work that out then you have fallen for the same trick that they have tried to fool us all with – if they said we have got 96% of all publishers to opt in then fine, but they did not, they implied it for sure, but then added the clause NMPA ‘market share’ – so now its meaningless because no-one, including Israelite, know what proportion of NMPA affiliated publishers exist to those that don’t! It only takes the majors publishers to opt in to achieve a potentially high marketshare figure because of their catalogue size. Of course the major publishers will opt in because they own shares in the streaming companies. Spotify, Majors, NMPA & HFA are all a big boys club working together – no independency here – they are all patting each other on the back having worked out a way to divvy up my unclaimed royalties because I did not opt in! sorry but thats my money and my rights irrespective of whether I opt in or not! I am shite at maths yet even I can see that this is a load of fanny – you guys are not stupid, why is this such an alien concept to you?

The 96% refers to revenue market share so it stands to reason that most of the streams on Spotify are generated by a few songwriters. There are of course many independent songwriters that get streamed but the challenge here is certifying that enough were disadvantaged in exactly the same way so as to make a class. This is extremely difficult and the judge will be hard pressed to untangle the complexities of music licensing to make this determination in a coherent way.

Making this about improper licensing under the compulsory is a tactical error that may end up hurting all songwriters. One thing we saw just last week is if the government decides to take a hard look at copyright law, they may come up with findings that shock and further disadvantage songwriters and publishers. Some of the bad outcomes I can foresee:

– it is determined that the compositions were already licensed through some other means, such as via a label, distributor or via Spotify’s P.R.O. blanket agreements.

– it is determined that the mechanical license for interactive streaming has created a broken marketplace and gets consolidated with the public performance license administered by the PRO’s.

– it is determined that the mechanical license is not prescribed by actual copyright law (its provisions are not actually signed into law by the president)

– Music services like Spotify and the like decide that independent artists are a pain in the ass to work with an start suppressing their content so it never gets streamed

Some, none or all could conceivably happen but the thing least likely to happen is an award of $200mm for copyright infringement,

Interesting. I never perceived $200 million as a windfall for independent songwriters. Even if those damages were actually awarded, they would be sliced into a large number of fairly small checks based on the number of works owned by each songwriter/publisher.

I always viewed $200 million as punishment for willfull infingement… in the only terms that most companies actually care about: money and reputation. Its about justice.

Yes, and my point is there may be no justice to mete out here. Some songwriters are aggreived but that doesn’t mean that wrong (much less willfull wrong) was done in the eyes of the law. I know that sounds horrible and unfair, but I would bet on this being the outcome, in one form or another.

PS: I firmly believe that some involved in the lawsuit see it as a business opportunity

News flash – Spotify are brilliant and elaborate thieves. In business for 8 years. Not one pay increase for a single musician yet. Spotify employees enjoy healthy salaries and benefits galore. Nobody can stop them. Not congress. Not U2. Not the media. And not thousands of musicians like me who got totally ass raped by them. Plain and simple. I have 3 million streams and my last royalty statement was for $2.52. I have 25,000 monthly listeners but Spotify doesn’t want me contacting them.
Can you say ‘slavery?’